New Zealand Misses Own Revenue Targets
March 6, 2012 Taxation in New Zealand
WELLINGTON – Tax revenues in New Zealand are nearly NZD 1 billion below forecast, but the government still believes that the country will reach a budget surplus within 2 years.
As was shown in the latest Financial Statements of the Government of New Zealand released on March 6th, tax revenues in New Zealand for the period of seven months, ending January 31st 2012, were NZD 946 million below forecast, while being NZD 1.1 billion above tax revenues during the same period in the previous year.
According to the Treasury of New Zealand, the lower than forecast tax revenues are a result of unexpectedly weak overall economic activity in New Zealand, which led to lowered collection of all taxes.
For the seven month period, collections of Goods and Service Tax (GST) were down by 4 percent, mainly due to insurance companies in the country making significant payouts for damages incurred in earthquakes throughout the last 12 months.
Revenues from corporate income tax were more than 5.1 percent below forecast, and the Treasury expects that they will continue to remain at relatively low levels until at least the end of the financial year on March 31st.
Collection of personal income tax was 3 percent below the government’s forecasts, reflecting a weaker than expected labor market.
Commenting on the results published in the Financial Statements, the Finance Minister of New Zealand Bill English said that the disappointingly low tax collections were offset by a NZD 1.24 billion decrease in government spending. He added that the tax revenue results emphasize the need for the government to maintain strict fiscal discipline in order to fulfill its own goal of reaching a budget surplus by the 2014 – 2015 fiscal year.
Photo by patrick h. lauke